MKT 410 Global Marketing Exam 1
EXAM Driver of global expansion
(Almost all tied to cost ) · Product life cycle....
Monroe Doctrine
- Policy to keep Europe out of the Americas and vice versa - Americans used to go take resources from spain - Still in place to some scope today - Roosevelt Corollary • U.S. would "police" Latin America - U.S. Perception • Justifiable part of our foreign policy - Latin American Perception • Unwelcome intrusions that are in the self-interest of U.S. History and Societal Behavior
Ethnocentrism
- notion that people on one's own company, culture or country know best how to do things when ethnocentrism becomes ignorance Ex dolce and gabbana China comercial
What does place include
-Availability where and when customers want it -Ensure products arrive in usable condition (global supply chain)- think of barge blocking the Suez Canal and how blocked our reliance on the supply chain became, we lost $10 billion per day worldwide from the global closure -Can be the Value Proposition Logistics of companies like amazon with 2-day shipping reaching the epitome of retail through their supply chains and setting expectations
what are the four main objectives of promotion?
-Informing -Educating -Persuading -Reminding ^^^ these are the four main objectives of Promotion; reminding is the most used. We like the familiar. Think of subway video in class was more of a persuasion, you engaged customers to use the app and order their subway
Non-tariff Barriers:
-Measures, other than traditional tariffs, that are used to distort international trade flows -Raise prices of both imports and import-competing goods -Favor domestic over foreign supply sources by causing importers to charge higher prices and to restrict import volumes UK considers Pringles to be potato chips although P&G considers them to be a 'healthier alternative'. This raises tariffs for P&G Japan enforced quota on the amount of 'California rice' that can be mixed with 'inferior' Asian rice
What does product include
-Package (ambience) -Warranty -Service -Brand -Image -Value
What does promotion include the integration of?
-Personal Selling -Advertising (Controversial Cultural Issues) Disney movies bring in many different cultures, Nike covers controversial topics/ People like Kaepernick, Serena Williams; no average brand could cover these controversial issues, Chikfila openly not in support of LGBTQ -Sales Promotion -Public Relations
Levels of Regional Economic and Political Integration
1. Political Union 2. Monetary Union 3. Common Market 4. Free Trade Agreement 5. General Bilateral/ Multilateral Agreement o Bilateral and multilateral agreements can be industry-specific or involve some or all products exchanged between countries (NATO, OPEC, etc.) o They are less formal in nature than free trade agreements, and they are not as stable as the other forms of integration
Bilateral agreements
: Limited to two countries
Consumer Perceived Value
=Get/ Give =Product Benefits + Service Benefits/ Direct Costs + Indirect Costs
Environmental adaptation
A conscious effort on the part of the international marketer to anticipate and prevent uncontrollable factors Most challenging and important adaptation for international marketers - cultural adjustments Must est. a frame of reference Time
Protect Infant Industries
According to the infant industry argument, a country's emerging industries need protection from international competition during their development phase until they become sufficiently competitive internationally
Protests against WTO and G-7
Anti-capitalist protestors are constantly at odds w/ WTO (EPA, Occupy Wall Street) The basic complaints are the consequences of globalization such as, sweat shops, domestic job loss, cultural extinction, higher oil prices, and diminished sovereignty of nations.
Sustainable development
Approach toward economic growth described as a cooperative effort among businesses, environmentalists, and others to seek growth with "wise resource management, equitable distribution of benefits, and reduction of negative efforts on people and the environment from the process of economic growth."
NAFTA
Canada and the US share the biggest trade relationship between any 2 countries in the world. Canada takes 20% of US exports and the US buys about 85% of Canada's exports. o No common external tariffs (In June 2018, tariffs were imposed on exports of US steel to Mexico and Canada created a heated reaction) o Restrictions on labor and other movements remain (immigration) In 2021, Canada and Mexico accounted for 28% of all US Trade
Interconnected supply chain
Car shortage- dealerships want to buy car back bc of shipping issues - usually at profit to you but u will have trouble finding a new one
sweden ex
Developing countries consider dams a cost-effective solution to a host of problems. Dams create electricity, help control floods, provide water for irrigation during dry periods, and can be a rich source of fish
Direct costs
Direct (monetary) costs include the price of the product, lifetime costs, quality assurance, and spare-part costs
Place
Distribution & Logistics
Marketing to emerging economies
Emerging economies can be lucrative places for marketers to establish a foothold ( telecommunications, education, healthcare) For products whose price is low enough, population is a more important variable
Costs of globalization
Environment- climate change, Sweatshops, domestic job loss, cultural extinction ( more connected we are- less individualized to culture) , impact of global supply chain, higher oil prices, diminished sovereignty (independence) of nations ( less power to do what you want
Assimilation
Full adoption and maintenance of the new culture, and resistance to one's old culture (fully involved) -Melting pot or Salad bowl?
Benefits of globalization
Gives us more options and consumer power Expands economic freedom Encourages competition Offers access to foreign capital, global export markets, and advanced technology Do we have too much access to info? Promotes higher labor and environmental standards Acts as a check on government power Globalization has also shifted advance,emts to certain countries causing huge migration issues
EXAM Uncontrollable aspects of global environment
Global economic forces (currency manipulation and devaluation Political instability/ gov interventions ( google conflicts with chinese authority) Foreign (local) competitive forces Level of technology (social media) Distribution of logistics in the host country Cultural forces (ways of doing business) Technology and smartphone integration are highly correlated with economic growth
Gain Influence:
Governments of the world's largest nations may become involved in trade to gain influence over smaller nations
the creation of the WTO and its impacts
Increased competition also leads to increased protectionism. The creation of the World Trade Organization (WTO) is one of the biggest advancements for free trade among countries. We should, however, view this data with caution. For example, it is quite clear that China is the United States' biggest trade problem; the imbalance of trade is more than four times greater than that with Mexico. However, often U.S. imports from China include a majority of parts made in other countries. A prominent example are Apple's products, assembled in and imported from China. The iPhone includes parts made in several other countries.
Indirect costs
Indirect costs for customer include conversation/negotiation with the supplier (transaction costs), internal costs, long lead time from suppliers, installation costs, your TIME
Acculturation
Learning a new culture (thrown in the deepend, ex: transfer student immediately coming in for school, learned from those around you)
Geopolitical Climate and Marketing Strategy
Marriott International recently stumbled in China when its website listed Tibet, Hong Kong, Macau, and Taiwan as "countries." The Chinese government shut down Marriott's Chinese website and app for more than a week (Apple) Marriott International stumbled in China when its website listed Tibet, Hong Kong, Macau, and Taiwan as "countries." Officially, the first three locations are "autonomous regions" of China; Hong Kong and Macau are "special administrative regions." And China considers Taiwan to be a "breakaway province" controlled by an illegitimate government. What seemed like an innocent mistake led to harsh penalties.
Top 10 US Trading Partners:
Mexico 14%; Canada 14%, China 14%, Japan 4.6%, Germany 4.4%, South.. 3.5%, UK 2.6%, Taiwan 2.5%, India 2.5%, Vietnam 2.5%
Monetary Union
Monetary Unions require a unified monetary policy for member countries A monetary union involves, among others: The creation of a unified, parastatal central bank The use of a single currency, or currencies that are in a fixed relationship to each other
Regional agreements:
NAFTA, EU expansion and single currency
The European Union
One of the World's most important political unions EU guarantees the freedom of movement of people, goods, services, and capital between member states and maintains a common trade policy with outside nations - Individual EU member countries can also fine companies over data privacy issues Eight EU countries don't use the Euro (Bulgaria, Croatia, Czech Republic, Denmark, Hungary, Poland, Romania, Sweden) They choose to use their own currency to maintain financial independence on certain key issues (Setting monetary policy, handling national debt, modulating inflation, and option to devalue currency in certain circumstances) EU After Brexit
Forces impacting global marketing-
PANDEMIC
Pricing
Price is what a buyer must give up obtaining a product or service -he most flexible of the "4 Ps" -Quickest to change -Competitive weapon -Perception of price Ex: Is an LV bag worth thousands of dollars? Or are you paying for the name? giving you a certain perceived value Think of someone who compulsively shops, sees that stuff is on sale so that justifies it Ex: ASPCA commercial with the sick animals in the arms of the angel- $2 a day sounds super digestible in comparison to $30/ month
Enculturation
Process by which individuals learn the beliefs and behaviors endorsed by one's own culture (acceptable or nonacceptable behaviors)
Product benefits
Product benefits for customer include meeting customer requirements, flexibility to meet changing customer needs, fitness for use, improved efficiency in operation, better profitability, branding, technically superior product, sustainable product solution, elimination of waste
Trends affecting global business
Rapid growth of the World Trade Organization (WTO) and regional free trade areas Acceptance of free market system and growing middle class in developing countries Emerging markets will account for 75% of world economic growth in the next 2 decades Struggle between capitalism and socialism manifesting itself more politically than economically (russia, china) Global concern ove67r major environmental issues (tourism)
Promotion
Role is to bring about exchanges with target markets
Maslow's Hierarchy of Needs
Self-Actualization- self-fulfillment, enriching experiences - higher than your ego because you're doing it for yourself, not looking for anything in return other than your own fulfillment Ego Needs- prestige, status, accomplishment Belongingness- love, friendship, acceptance by others Safety- security, shelter, protection Physiological- water, sleep, food
Service benefits
Service benefits for customer include product service and support, customer support, BDA- service (before, during and after the buying), short lead time, sharing and leasing products and service
Preserve National Security
The globalization of markets and production creates new security risks for companies. Certain imports can be restricted in the name of preserving national security. Governments also have national security motives for banning certain defense-related goods from export to other nations.
Economic Motives:
The most common economic reason for nations' attempts to influence international trade
Product
The starting point of the "4 Ps"; Products can be... Services (often difficult to disassemble)
Patterns of international trade:
The value and volume of international trade continues to increase. Today, world merchandise exports are valued at more than $16.5 trillion, and service exports are worth more than $4.8 trillion. Table 5.1 shows the world's largest exporters of merchandise and services. Perhaps not surprisingly, the United States ranks first in commercial services exports and ranks second in merchandise exports (behind China).
World Bank
The world bank headquarters is in Washington DC US ▪ Specialized agency of the United Nations. ▪ Largest international bank that sponsors economic development. ▪ Employs international specialists in economics, finance, sectoral development. ▪ Focus on health and information technology
Gross domestic product- GDP what a country manufacture in a year
Total market value of all final goods and services produced within a country borders per year Final referred to final products that are sold, not to intermediate products used in assembly of final products ( if the value brakes (intermediate product) and the value of a car (final) were counted separately the braked would count twice) Shift of agriculture vs service Shows diff in countries
The IMF and World Bank
Two Global Institutions • Help nations become and remain economically viable International Monetary Fund (IMF) • Goals of 188-country membership • Stabilize foreign exchange rates • Establish freely convertible currency • Specialized agency of the United Nations. • Member voting power linked to amount they contribute. • Less of a lender of last resort, than a body instituting appropriate development strategies. • Mediator between debtors and creditors. • Provides training and technical assistance for austerity measures.
US Military spending
US Military spending compared to the rest of the world $778.08B • production creates new security risks for companies. Certain imports can be restricted in the name of preserving national security. Governments also have national security motives for banning certain defense-related goods from export to other nations. • Respond to "Unfair" Trade: Many observers argue that it makes no sense for one nation to allow free trade if other nations actively protect their own industries. Gain Influence: Governments of the world's largest nations may become involved in trade to gain influence over smaller nations
What is the value/ Perceived benefit of the product?
Utilitarian (helpful; functional value) vs. Hedonic (abstract; based on what you expect) Ex: grocery list shopping is utilitarian; window shopping is giving a value of experience that is hedonic
Free Trade Area (FTA
an agreement between two or more countries to reduce or eliminate customs duties and nontariff trade barriers.
The visible daily behavior
e.g. -body language -clothing -lifestyle -drinking and eating habits
Values and social morals
e.g. -family values -sex roles -friendship patterns
Basic cultural assumptions
e.g. -national identity -ethnic culture -religion
Protectionism
economic policy of restricting trade through quotas, tariffs, and other measures · Mexican avocado growers are subject to a $30 million quota, can only ship during the winter, and only to the northeast US to protect California farmers US imposed a 35% tariff on all tires shipped from China (Upheld by WTO
Global marketing-
focusing a company's resources and competencies on global market opportunities and threats
5 stages of international market involvement
how active you really are No direct foreign marketing Product "indirectly" reach foreign markets Infrequent foreign marketing Caused by temporary surpluses Regular foreign Products are adapted to foreign market International marketing Fully committed and involved in foreign markets Production takes place on foreign soil earning firms Global marketing Transnational stage - firms sees the world as one market Market segmentation Not defined by borders: the whole world is market Most effects yet most expensive
Economic globalization-
integration of national economies into the international economy through trade, direct foreign investment, and global flows of capital, labor, technology, and immigration companies around the world are more dependent on each other Less trade barriers, technological advancements
Attitudes
learned tendency to respond in a consistent way to something
Preempt the customers preference
make it a preference before they know it is As consumers, we gravitate toward familiar
Geocentric ( transnational) orientation
mix of poly and ethnocentric Ex. Milan starbucks reserve- mix of american and italian
Customs Union
o A Customs Union enjoys the free trade area's reduced or eliminated internal tariffs and adds a common external tariff on producs imported from countries outside the union The European union was a customs union before becoming a common market o Customs unions exist between EU and Turkey, the Andean Community, Mercosur, and CARICOM
What does G7 Address?
o Biotechnology o Food Safety o Economic Development o Disarmament, arms control o Organized crime, drug trafficking o Terrorism o Environmental and health issues o Trade
Among the hurdles to economic and political integration are:
o Differences in education, culture, and history o Physical distance o Differences in level of economic development o National concerns regarding loss of sovereignty o A history of conflict
Political Union
o The highest level of regional integration o Assumes a viable economic integration and involves the establishment of viable common governing bodies, legislative bodies, and enforcement powers o The European Union
Product development costs:
only seven countries account for ab 75% of pharma sales (US 45%- $446 billion) Drugs make people money
Regiocentric orientation
operational strategies are formed based on assessment of the entire region rather than individual countries (integrated on regional scales)
Management orientations Ethnocentric orientation Polycentric orientation
opposite of ethnocentrism (multinational) Decentralized approach, each country treated uniquely and develops own marketing strategies based on host country Leads to localized or adaptation approach that assumes products must be adapted to local market conditions ex . go to china and only each china cuisine- not american tourist locations
Why Do governments intervene?
political motives, protect jobs, preserve national security, respond to unfair trade, gain influence
Culture
represents "a way of life" or the conscious and unconscious values, beliefs, and thought processes that are learned, shared by a group of people, and transmitted through generations. People who identify with certain types of consumption develop their own norms ("coffee culture", "soccer culture", "credit card culture", "pub culture", "fast food culture"). Think about convenience running our culture in the US's consumers; technology can resonate higher with certain consumers than others
Rules of origin
requirements restrict transshipment of goods from the country with the lowest tariff to another. Roughly 50% of trade takes place between countries in FTAs.(Sometimes duties may be eliminated on the day of the agreement or phased out over time. Chile and Canada established an FTA in 1997. A Caterpillar tractor made in Canada could be shipped to Chile duty free. A US made tractor couldn't be shipped through Canada to Chile because the Made in the USA label would subject it to about $13,000 in duties. Little wonder that the US negotiated its own agreement with Chile that came into effect in 2003.)
Obstacles
self - reference to one's own cultural values, experiences, and knowledge as a basis for decisions Ex personal space
Tariffs:
taxes imposed on goods entering a particular country to: -Discourage imports of particular goods -Penalize countries that aren't politically aligned -Generate revenues
Value Propositions
the bundle of benefits you get from a purpose Ex: the pitches on Shark Tank are value propositions, they differ on the benefits + price on each side of the continuum
The World Trade Organization
· Forum for trade-related negotiations among 160 members § Serves as trade dispute mediator through DSB § Has enforcement power and can impose sanctions § Technical assistance and training for developing countries (The Dispute Settlement Body DSB mediates unfair trade barriers. For 60 days, parties are expected to negotiate in good faith. After that, the DSB will appoint a panel of trade experts to hear the case behind closed doors. If, after due process, a country's policies are found to violate WTO rules, it is expected to change those policies or face sanctions.) Group of Seven (G7)
Arguments for Protectionism:
· Infant Industry argument: o Allows low-income countries to protect new industries from international competitors · Natural resources conservation and environmental protection: o Trade restrictions aimed at conserving national natural resources · Consumer protection o Allows favoring local over international firms by applying rigid standards, quality controls, and product origin requirements · National Defense o Can result in banning of publications or products that attempt to destabilize the government or that bring outside influence
Group of Seven (G7)
· Members from industrialized countries, Canada, France, Germany, Italy, Japan, United Kingdom, and United States o Russia was an informal group member (G8) until the Russian annexationof Crimea
Percentage Requirements
· Requirement that a percentage of the products imported be locally produced · Local content requirement o Met by manipulating and/or assembling the product on the territory of the importing country, usually in a foreign trade zone Favor local contribution and labor, or limit foreign ownership to a certain percentage
Converging needs and information revolution
· Technology: can see trends from all over the world
General Agreement on Tariffs and Trade (GATT)
· Trade shall be conducted on a nondiscrimiinatory basis and protection afforded to domestic industries through customs and tariffs, not through import quotas · Consultation is used to resolve global trade problems o GATT lacked enforcement power; nicknamed the General Agreement to zRalk and Talk o Disputes lased for years Evolved into the WTO
Boycotts, Embargos, Sanctions
• Boycotts ▪ Action group calling for a ban on all goods associated with a particular company and/or country. ▪ Target company may be representative of, or even synonymous with, its country of origin. • Embargos ▪ Prohibiting all business deals with the target country; affects third parties. • Sanctions ▪ Punitive trade restrictions applied by a country or group against another country for noncompliance.
Controlling Population Growth
• Change in beliefs about parenting and importance of large family • Adequate incomes • Higher literacy levels • Education for women • Universal access to healthcare • Family planning • Universally used by governments to control birthrates • Improved nutrition
Population Impacts Demand
• Current estimate: more than 7.5 billion people • Projected by 2050: about 9.8 billion • 85% of population will be concentrated in underdeveloped regions • 1.2 billion jobs must be created to accommodate growth Hong Kong
Greenhouse gas emissions
• Gases resulting primarily from the use of fossil fuels that tend to trap heat in the earth's atmosphere and are causal factors in global climate change.
Immigration and Labor Costs
• Immigration can help global population issues • Move from underdeveloped, overpopulated regions • Move to industrialized regions with worker shortage • Europe will need 1.4 billion immigrants over next 50 years • Japan and U.S. will need 600 million immigrants by 2050 • Political and cultural opposition is a barrier • Immigrants from Syria a major catalyst for 2016 Brexit vote • For most countries, mass immigration is not well received by the resident population. However, a recent report from the United Nations makes the strongest argument for change in immigration laws as a viable solution. The free flow of immigration will help ameliorate the dual problems of explosive population expansion in less-developed countries and worker shortage in industrialized regions.
Japanese history impacts its business
• Japan went through many changes through history • Shogun feudal system, threat of domination by colonial powers, rise of social classes, humiliation, and rebuilding after WWII • Japanese behaviors and values shaped by history • Confucian philosophy • Basic virtue of loyalty to social groups, country • Cooperation for the collective good
• Manifest Destiny
• Justified U.S. expansion from Atlantic to Pacific • Result of this was the native americans having to be moved to reservations by us
Natural Resources and Economic Growth
• Many factors can lead to economic stagnation • Climate and topography, civil wars, poor environmental policies, and natural disasters • Examples • Poor irrigation and water management causes droughts, floods, and soil erosion, and ultimately causes creeping deserts (California) • Population increases and deforestation intensify impact of drought and lead to malnutrition and poor health
Respond to "Unfair" Trade:
• Many observers argue that it makes no sense for one nation to allow free trade if other nations actively protect their own industries.
Cultural Motives
• Nations often restrict trade in goods and services to achieve cultural objectives, the most common being protection of national identity. Ex: If US intervenes in a Country and all the news outlets become American, eventually they are going to impact and shape the culture over time
Population Decline
• Occurring in developed, industrialized nations • Birthrates in Europe, Japan decreasing since 1960s • More women choosing careers over children • Couples are deciding to remain childless • U.N. projects drastic increase in older population by 2050 • 65 to 84 years: 3 times increase (Japan) • 85 years and over: 6 times increase • 100 years and over: 16 times increase The New Reset- Nation Leaders met yesterday 09/21
Dynamics of Global Population Trends
• Population growth in urban areas • 3.5% in 1800, 61% by 2030 • People migrate for education, healthcare, jobs • Most growth occurs in economically strained urban cities • Overpopulation of unskilled workers in slums • Puts pressure on sanitation systems, electricity, water supplies, social services • Migration only improves quality of life for some
Protect Jobs:
• Short of an unpopular war, nothing will oust a government faster than high rates of unemployment. Thus, practically all governments become involved when free trade creates job losses at home.
What is marketing's role and responisbilityh with these? How can we help it"? • Influencing Behavior Change
• Show consequences of risky behavior • Relate the Problem to Consumers (IF Insurance) • Use Public Figures as Endorsements • Guerilla marketing • Engage through social media • Provide incentives to change Book: The power of habit Trying to create habits to product: or question: how can we create products to change people's behaviors? Think of the my Liver bot on Facebook messenger to make people recognize their drinking habits
Culture
• Society's accepted basis for responding to external and internal events • Influenced by historical events and geographical uniqueness • History and geography impact business
Pursue Strategic Trade Policy
• Supporters of strategic trade policy argue that it results in increased national income. Although it sounds as if strategic trade policy only has benefits, there can be drawbacks.
Confucian philosophy
• The 2,500-year-old teachings of Chinese philosopher, Confucius, still strongly influence cultures in East Asia today. Primary among his teachings were a deep respect for elders, rulers, and husbands.
Political Motives:
• The main political motives behind government intervention in trade include:
Sustainability
• Using marketing and technology to drive policy change (Google) • Helping consumers recognize their impact (Face Your Waste)
